In September 2012, the European Commission initiated anti-dumping proceedings against imports of solar panels from China, and in November 2012, the Commission added anti-subsidy proceedings with respect to the same imports. These investigations are among the largest ever carried out by the European Commission, as the value of solar panel imports from China into the European Union amounts to €21 billion a year.
These investigations cover not only solar modules but also cells and wafers. This means that if definitive trade defense measures are imposed, prices of solar panels and their main components in the European Union are going to increase substantially. Indeed, modules, cells, or wafers manufactured in China or exported from China—the biggest solar panel exporter in the world—would be subject to trade defense measures, which in principle consist of additional import duties. This would be a peculiar outcome, considering that several EU Member States have significantly subsidized, and still subsidize, companies and private individuals who decide to use solar panels.
On June 5, the European Commission imposed provisional anti-dumping duties amounting to 11.8 percent. However, this rate was only temporary. As of August 6, the provisional anti-dumping duty ranges from 38.3 percent to 67.9 percent.
Over the two months during which the European Commission imposed the "lower" provisional anti-dumping duty, the EU and China negotiated a deal in the form of a so-called "undertaking." EU anti-dumping law allows the Commission to grant an undertaking instead of imposing definitive trade defense duties. The undertaking, which entered into force on August 6, establishes a minimum price for up to a certain level of imports into the EU that will not be subject to the duty. After the import level threshold has been exceeded, the anti-dumping duty will be due, at the higher provisional rates mentioned above. Exports to the EU made by Chinese exporting producers who did not agree to the undertaking will all be subject to the anti-dumping duty.
Failed negotiations would likely have led to a "trade war" between the EU and China, which is a situation that both parties wanted to avoid. This is certainly true in the European Union: in May, 18 EU Member States opposed the adoption of anti-dumping measures. Even Germany voiced strong opposition to trade defense measures on solar panels, even though the complainant in the proceedings is a German company.
The Commission has not adopted provisional anti-subsidy measures and stated on August 7 that it will not do so, but definitive anti-subsidy measures can still be imposed. The deadline for the imposition of definitive anti-dumping and anti-subsidy measures is December 5.